ACC-561 Ridley Company

$6.00

Description

Ridley Company has a factory machine with a book value of $84,900 and a remaining useful life of 5 years. A new machine is available at a cost of $197,100. This machine will have a 5-year useful life with no salvage value. The new machine will lower annual variable manufacturing costs from $645,300 to $445,800.

Prepare an analysis showing whether the old machine should be retained or replaced.(If an amount reduces the net income for Increase (Decrease) column then enter with a negative sign preceding the number e.g. -15,000 or parenthesis, e.g. (15,000). Enter all other amounts in all other columns as positive and subtract where necessary.)

Retain
Equipment

Replace
Equipment

Net 5-Year
Income
Increase
(Decrease)

Variable manufacturing costs $.wiley.com/edugen/art2/common/pixel.gif”> $.wiley.com/edugen/art2/common/pixel.gif”> $.wiley.com/edugen/art2/common/pixel.gif”>
New machine cost .wiley.com/edugen/art2/common/pixel.gif”> .wiley.com/edugen/art2/common/pixel.gif”> .wiley.com/edugen/art2/common/pixel.gif”>
Total $.wiley.com/edugen/art2/common/pixel.gif”> $.wiley.com/edugen/art2/common/pixel.gif”> $.wiley.com/edugen/art2/common/pixel.gif”>

The old factory machine should be.wiley.com/edugen/art2/common/pixel.gif”>.

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